Creating Efficient Consolidated Financial Statements

Moreover, for the single reporting entity, there is a variety of procedural steps that must be taken and understood in order to ensure the proper accounting. For instance, the starting point for the preparation of consolidated statements begin with the separate financial statements of the companies and after some adjustments and eliminations of amounts they are added together in order to create appropriate consolidated financial statements. Additionally, a few steps that can be taken into account to properly create consolidated financial statements are as follows: Step 1- Determine which holdings should be reported as subsidiaries. Step 2- Gather all the financial information together from all the companies. For instance, gathering the

Furthermore, add together the separate values from the income statements of the parent company and the subsidiaries.
Step 10- Review the consolidated statements for duplicate values. For instance, an individual should consider and check, but is not limited to, intercorporate stock holdings, which means that the consolidated company owns parts of itself, they should also check for intercorporate receivables and payables which means that the company owes itself money, and they should also check for intercorporate sales which means that the company is selling items to itself for profit.
Step 11- Eliminate intercorporate stockholdings, which arises from stock(s) that are in the subsidiary being owned by the parent and are not reportable as stock outstanding in the consolidated statement. Moreover, for the adjustments to the consolidated balance sheet, an individual must debit the subsidiary’s common stock, retained earnings, and additional paid in capital. In addition, they must credit the consolidate stock of subsidiary account for the book value of the intercorporate